An insurer is leaving a reader hundreds of pounds out of pocket due to a
miscalculated bonus that it will not put right.

I enclose copies of two letters I have received from Royal London Plus regarding my annuity policy.

I was puzzled to receive the first letter, explaining that my annual bonus had been miscalculated, causing a reduction in the guaranteed annuity of £127.64 per annum, which is approximately 5pc of the bonus element. The pension is due to commence in June 2013 and unfortunately it is the only income I will have to supplement my state pension, so even this small reduction is significant.

I telephoned the company straight away for a more detailed explanation of what the error was and when it occurred. I was immediately asked if I was making a complaint. I said I supposed so – but what I wanted was someone to tell me how the mistake had happened. My details were taken and I was told that the company would be in touch.

I was surprised and slightly offended to receive the second letter offering £50 in compensation and outlining that I was not legally entitled to "benefit" from a genuine "oversight". I received no further details of the reason behind the mistake. I am left wondering why none was given, just the final offer and details of how to complain to the ombudsman. I will be at least £1,276 worse off, as the policy has a 10-year minimum guarantee.

JI, Kent

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You wrote this letter to me in May2012. This annuity was originally taken out with Refuge Assurance in 1988, which later merged with and traded as United Friendly. A change from annual payments to monthly ones was made at the insurer's request as you were told it no longer collected yearly premiums. You accepted this and were never made aware that this could result in a material loss to you.

Later, Royal London acquired the business. Under its watch the policy has not flourished. I approached it about what had happened to you and it said an effort had been made by the original insurer to convert customers paying annually via the "at the door" collection service to monthly direct debits. It said that it wasn't a necessity but was suggested as being more convenient for the customer and more efficient for the business.

Because of the change in the way payments were made on your policy, an amendment should have been made to the bonus but hadn't been. As you didn't know the implications, the change had not been challengeable. At this point it offered £150 as compensation – rather than the £50 it had mentioned to you before.

I felt that for an error perpetrated over some 12 years, full redress should be made.

It wouldn't budge further, though. You then took the matter to the Financial Ombudsman Service and, after investigating, it suggested that as you were so close to retirement, the goodwill gesture should be enhanced to £250. You have accepted this.